The U.S. Supreme Court will decide whether states can be sued to raise Medicaid reimbursement rates, in a case that will undoubtedly impact the future of Medicaid.

Armstrong v. Exceptional Child Center arises out of a lawsuit by Idaho healthcare providers who contended that Idaho was unfairly keeping Medicaid reimbursement rates too low for state budget reasons, in violation of federal law.

The healthcare providers won in lower courts, and Idaho has appealed to the Supreme Court, arguing that private healthcare providers can’t sue to force the state to increase its Medicaid rates. 27 other states have joined Idaho in its appeal, including Pennsylvania (but not New Jersey or New York).

Higher Medicaid reimbursement rates mean more choices for consumers, since more doctors will accept Medicaid patients if Medicaid pays more. However, it’s a balancing act, since Medicaid can be a major drain on state budgets.

However, the impact of this case will be somewhat blunted in New Jersey, at least for now. That is because New Jersey no longer pays healthcare providers directly, instead paying private HMO’s who pay their own rates to healthcare providers. New Jersey is even transitioning long-term care patients to this model.

Nonetheless, the Supreme Court’s decision promises to have a deep impact on Medicaid generally, on how states balance state budget concerns with obligations to care for citizens, and on the influence private parties have on state policy.